Find out how to track purchases subject to use tax in QuickBooks. I have created a simple tutorial that is effective and easy to follow. www.MyQuickBookkepper.com
1. TRACKING USE TAX IN
QUICKBOOKS
Tips and tools for tracking use tax in
QuickBooks. By Jo Tsai Cherniss
2. What is use tax?
When you make a retail purchase,
Use tax is a tax on the you usually pay sales tax to the
use of goods or seller, who in turn pays it to the
State. However, there are instances
certain services in when sales tax is not paid on
most States, when purchases, and in many of these
situations, use tax is due.
State sales tax has For example, State of California
not been paid. states that “the use, storage, or
other consumption of those same
kinds of items in California .”
There is no one rule that applies to
all states, so be sure you are
familiar with the rules in your
particular State (contact your state’s
Department of Revenue).
3. Step 1: Prepare
Create an account
titled “Use Tax
Payable”
Thisis an Other Current
Liability Account in
QuickBooks.
4. Step 2: Record
Enter the
Purchase
with the
sales tax
calculated,
then deduct
the sales tax
and record it
under “Sales
Tax
Payable.”
6. Step 4: Adjust Taxes Due
1. Enter the Adjustment
1 Date
2. Enter Sales Tax Vendor
2 (the government agency
3
that collects sales tax).
4 3. Assign Use Tax Payable
5 in the Adjustment
Account
4. Increase Sales Tax
5. Enter increase amount
7. Step 5: Make Payment
Go to Vendors>Pay
Sales Tax>Manage
Sales Tax
Click Pay Sales Tax
button
8. Bonus: Tracking Tax Credit
EXAMPLE for State of
Five Step Process
California
Step 1: Prepare = Tax at Source
Step 2: Enter as it happens = Tax District & Price in
Step 3: Generate report Memo
Step 4: Adjust tax payment = Sort by Memo
Step 5: Render payment = Decrease Taxes Owed
The five steps process may also be
used to track tax credits in
QuickBooks.
9. Resources: State Departments of
Revenue
Links to State Departments of Revenue
California Florida Kentucky Montana Ohio Utah
Alabama Georgia Louisiana Nebraska Oklahoma Vermont
Alaska Guam Maine Nevada Oregon Virginia
New
Arizona Hawaii Maryland Pennsylvania Washington
Hampshire
Massachusett
Arkansas Idaho New Jersey Rhode Island West Virginia
s
South
Colorado Illinois Michigan New Mexico Wisconsin
Carolina
Connecticut Indiana Minnesota New York South Dakota Wyoming
North
Delaware Iowa Mississippi Tennessee
Carolina
District of
Columbia
Kansas Missouri North Dakota Texas
(Washington
DC)
10. THANK YOU
myquickbookkeeper.com
424.229.2719
westwood | manhattan beach
jo@myquickbookkeeper.com
Tracking Use Tax in QuickBooks. 2011 Jo Tsai Cherniss. All Rights Reserved.
